Missouri Auditor Finds License Scoring Flaws in 2019 Cannabis Program

Missouri State Auditor Scott Fitzpatrick released a critical assessment of the state's medical marijuana licensing process Wednesday, finding that scoring irregularities in 2019 applications led to millions in legal fees and ongoing questions about program integrity.

"It's clear there were some significant issues with how license applications were evaluated and scored that cast a shadow over the program," Fitzpatrick stated in the report.

The audit examined the Department of Health and Senior Services' handling of the initial medical marijuana license applications, which became the subject of multiple lawsuits from unsuccessful applicants. Missouri voters approved Amendment 2 in 2018, establishing the medical cannabis program that began accepting license applications the following year.

The Licensing Controversy

The state awarded 192 dispensary licenses, 60 cultivation licenses, and 86 manufacturing licenses in 2019. But the process quickly drew legal challenges from applicants who claimed inconsistent scoring and evaluation procedures.

Those lawsuits have cost Missouri taxpayers substantial sums in legal defense and settlements. The audit didn't specify exact figures, but court records show the state has paid out multiple settlements to resolve licensing disputes.

State regulators pushed back against the audit's findings, according to the Missouri Independent's Rebecca Rivas. The Department of Health and Senior Services defended its evaluation process, though specifics of their response weren't immediately detailed in the initial report.

Market Impact

Missouri's medical marijuana market has grown significantly since those early licensing disputes. The state now has over 370,000 registered medical cannabis patients and generated more than $1 billion in sales since the program launched.

But the licensing questions continue to affect the industry. Several companies that received licenses in 2019 have since sold their operations or struggled to maintain profitability amid the competitive market. Meanwhile, some applicants who lost out in the initial process have pursued litigation for years.

The numbers tell the story: Missouri's program ranks among the fastest-growing medical markets in the country by patient count. Yet the rocky start has created persistent questions about fairness and transparency in cannabis licensing—issues that plague programs nationwide.

What Regulators Say

The tension between Fitzpatrick's office and state regulators reflects broader challenges in cannabis program administration. Many states have faced similar licensing controversies, from Illinois to Massachusetts, where scoring disputes and allegations of favoritism have led to costly legal battles and program delays.

Missouri's situation is particularly notable because the state is now preparing for adult-use sales following voter approval of Amendment 3 in November 2022. The new recreational market launched in February 2023, with existing medical license holders given priority access.

Market watchers note that the audit's timing—four years after the initial licensing—suggests ongoing scrutiny of how states manage cannabis programs. With billions in tax revenue at stake and intense competition for limited licenses, transparency in application processes has become a critical issue for regulators nationwide.

Looking Ahead

The audit's release comes as Missouri's combined medical and recreational market continues expanding. State officials project adult-use sales could reach $1.2 billion annually once the market matures.

But the licensing questions from 2019 remain unresolved for some applicants. Several lawsuits are still pending in Missouri courts, and the audit may provide ammunition for ongoing legal challenges.

For the broader cannabis industry, Missouri's experience offers a cautionary tale about the importance of clear, defensible licensing criteria. As more states consider legalization, the administrative challenges of awarding limited licenses continue to pose significant risks for regulators and taxpayers alike.

The Department of Health and Senior Services has not yet released a detailed public response to the audit's specific findings.

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This article is based on original reporting by www.marijuanamoment.net.